Suppose that the equilibrium price of DVD players increases and the equilibrium quantity increases. Which of the following best fits the observed data?
A)An increase in demand with supply constant.
B)An increase in demand coupled with a decrease in supply.
C)An increase in demand coupled with an increase in supply.
D)A decrease in demand with supply constant.

Question

Quizplus · Accepted Answer

An increase in demand with supply constant leads to an increase in both equilibrium price and quantity. This is the only option that fits the observed data of an increase in both price and quantity. Option B would lead to an increase in price but a decrease in quantity, while options C and D would lead to an increase in quantity but a decrease in price.

Suppose That the Equilibrium Price of DVD Players Increases and the Equilibrium